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Posted
Oct 01 2009, 09:17 AM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
 This article is written by Minyanville's Glenn Curtis
It’s pretty likely that some upper-crust retailers may see small pockets of strength in the months to come. But for the most part, frugal shoppers (like me -- I’m cheap) will be searching out low prices and clearance specials -- particularly during the holiday season -- and as such, will be more likely to schlep their way to the popular discount stores. Click here for my last take on Costco.
Washington-based wholesale club Costco (COST) has some things going for it as well as some things that aren’t too swift. Here they are (in no particular order):
1. I do agree that some consumers are looking to save money and costly trips to the store (read: gas) by buying items in bulk. However, I also believe that the vast majority of consumers are looking for storefronts that carry wide-ranging merchandise selections that are known for their super low prices.
You may be wondering: Isn’t that kind of what Costco does? The answer is sort of. It has many types of food, some clothing, some books, and other merchandise. But if you’re interested in a certain variety of ketchup or need to replace one light bulb (that is, you don’t need items sold by the truckload but still want them at rock-bottom prices), I’d wager you’ll hit a store like Wal-Mart (WMT), or perhaps a Target (TGT) first. While not as plentiful as the proverbial Starbucks (SBUX) on every corner, both Wal-Mart and Target are convenient for most cost-conscious Americans. See also my recent take on Starbucks, Starbucks Chatter Is Appetizing
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Posted
Sep 09 2009, 11:38 AM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
This article is written by Minyanville's Kristin Graham It’s only September, but retailers already have their eye on the upcoming holidays. With the disastrous 2008 shopping season in our rear-view mirror, many analysts are hopeful that the 2009 holidays will be a bit more joyous.
According to a survey by Information Resources Inc (IRI), roughly 77% of respondents said they're willing to splurge on a gift for the 2009 holidays even if times are tough. Based on its data, the market research firm stated that it's “conservatively optimistic” about holiday spending. For more on retailers, see "Retailers Go Back-to-School." As a retail analyst, it's become depressing to watch over the sector in the past year. I know it’s easy to wish for an industry-wide improvement. But to be frank, I just don’t foresee recovery anytime soon -- at least not before the holidays are over. And I think investors should be prepared for another gloomy shopping season. Bing: Retail Stocks
Right now, the economy is still in the beginning states of recuperating from a very traumatic recession. Consumer spending is usually one of the last pieces of the economy to recover. So consumers may respond to surveys saying the want to splurge and spend more. My question is whether that’s really feasible.
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Posted
Aug 06 2009, 12:49 PM
by
James Dlugosch
Rating:
Money Blog: Top Stocks Blog - MSN Money
How many months of lackluster performance at Costco ( COST) do we need to see before investors start dumping shares?
Once again, the discount retailer reported disappointing results. Same-store sales in July fell by 7% including a stunning drop of 8% in the United States. Excluding gas deflation, the drop was 2%. Analysts were expecting same-store sales to fall by 6.7% or 1.9% excluding gas sales.
Bing: Costco Wholesale
I'm losing count -- how many months of weakness do we have now? I think pretty much the entire year with no end in sight.
At least this time around we've been spared the typical excuse about a weak economy, but apparently it doesn't really matter. The market and the Costco apologists that love this company are buying the stock supporting share price at a time of great difficulty.
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Posted
Jul 09 2009, 03:25 PM
by
James Dlugosch
Rating:
Money Blog: Top Stocks Blog - MSN Money
Individual shareholders have a tendency to complain about stock performance after the fact. They are real good at being Monday-morning quarterbacks, criticizing management for being poor stewards of the company's fortunes only after a stock drops hard.
They need to be more vocal in real time!
A great case in point is the story of Costco's decline -- or is it time to say demise? I've written previously about Costco's recent performance, putting the blame squarely on management.
Based on the responses from readers, it would seem that most disagree with that opinion. Some of the comments include asking for more detail about management missteps or suggest that short-term performance is related to currency issues or other factors outside of management's control.
My response? Hogwash!
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Posted
Jun 17 2009, 04:29 PM
by
James Dlugosch
Rating:
Money Blog: Top Stocks Blog - MSN Money
One of the more amusing impacts of the collapse on Wall Street (in a Schadenfreude sort of way) has been on the hedge-fund community.
These jokers with their so-called "no-lose approach" to the market played a dangerous game of musical chairs. When that music stopped, so too did the huge paychecks and bonuses.
Everyday investors who were innocent bystanders and have little sympathy for these guys -- or blame them, at least a little -- may be delight by this great report in The Times of London.
It seems their wives have had to cut back on some very conspicuous consumption -- and they aren't happy about it.
The hubbies are out of work and aren't find much in the way of jobs. They've cut out private planes and expensive wine at dinner. They're bickering with wives over budgets and how to cut costs. Shoot, some spouses are even out-earning these former masters of the universe.
Does it pain you to know what they're going through?
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Posted
Jun 04 2009, 01:19 PM
by
James Dlugosch
Rating:
Money Blog: Top Stocks Blog - MSN Money
Will someone in the executive suite at Costco (COST) get a clue, please? With one of the greatest opportunities in decades to separate yourself from the competition, you are puking all over the place.
Today, we learned that same-store sales at Costco have fallen by a whopping 7%. To be fair, that sensational headline is mostly due to lower gasoline prices and a weak dollar, but even so the discount retailer saw sales drop by 1%.
This economy is separating the men from the boys, and it should be obvious to anyone paying attention that Costco is being operated by boys. At a time when discounts rule the day, Costco should be increasing its business. Instead, it is are losing the game, and the sad part is management is clearly playing the blame game.
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Posted
Jun 04 2009, 03:37 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
Many big-box retailers, including Best Buy (BBY), Target (TGT), and Costco (COST), are struggling as the recession beats down their same-store sales. General retailers such as Sears (SHLD) are not faring any better. That means that the layoffs in the retail industry, which have already been extensive, are likely to continue, especially if the 2009 holiday season is weak.
Wal-Mart (WMT) is at the other end of the spectrum, by itself. The world’s largest retailer says it will add 22,000 jobs at its U.S. stores this year. That is down slightly from 2008, but in an economy that is forcing hundreds of thousands of people out of work each month, it is extremely impressive.
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Posted
Jun 03 2009, 06:31 AM
by
John Reese
Rating:
Money Blog: Top Stocks Blog - MSN Money
Costco's (COST) subpar fiscal-third-quarter results have gotten a lot of headlines lately. The company has taken heat from some for its 29% decline in earnings -- and gotten praise from others for its reluctance to lay off employees, part of the reason behind the profit decline.
Costco management's decision to avoid layoffs is admirable; whether or not it was a good business decision is another matter. What's more important for investors, however, is that over the long haul, Costco's management hasn't kept pace with that of competitor Wal-Mart (WMT), and the Guru Strategies I run on Validea.com bear that out.
Some may argue that the two retailers aren't direct competitors, and, to be sure, there are some significant differences in their business. For one thing, Costco requires an annual membership fee, while Wal-Mart stores do not. But if you think the two companies aren't competing for the same shoppers, you're kidding yourself. (At the very least, Wal-Mart's Sam's Club -- a discount club that requires an annual fee and accounts for about 12% of Wal-Mart's annual revenues -- is a direct Costco competitor.)
And, over the years, Wal-Mart management has done a better job bringing in those shoppers
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Posted
Jun 02 2009, 07:20 AM
by
James Dlugosch
Rating:
Money Blog: Top Stocks Blog - MSN Money
 I love it when management supports a stock with insider buying. Nothing aligns executive and shareholder interest better than having skin in the game. Without it, management is just playing with your money. So when I recently learned that Wal-Mart (WMT) managers were gobbling up shares, I took note.
Historically, insider buying is very bullish for stocks. In fact, many investors swear by it and closely follow the actions of management with regard to stock trades. The general idea is that who better knows about a company and its prospects than management?
As a result, I would be a buyer of Wal-Mart and a seller of Costco (COST).
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Posted
May 29 2009, 02:14 PM
by
James Dlugosch
Rating:
Money Blog: Top Stocks Blog - MSN Money
Even though consumer confidence soared in April, Costco's (COST) profits continue to erode -- and at a time when they should be doing well given their price advantage. But investors don't seem to care; they absolutely love Costco.
On Thursday, Coscto reported results for the most recent period. For the period ending May 10, Costco said it made a profit of 48 per share, falling short of Wall Street estimates. The stock was down on the news but held up fairly well considering the miss. In my opinion, the pain should be much greater. Where is the homerun that other retailers are seeing?
Not at Costco, apparently. The company is struggling as its customers focus on low-margin products such as food instead of high-margin products like jewelry. Perhaps we should not be fooled by the strength in consumer confidence, then. In advance of a presumed economic recovery, the market is full of beaten-down names that have bounced, doubling or tripling in value in a very short period of time.
I don't want to rain on the parade, but maybe we should be thinking of taking money off the table in the retail space. At least in the short term it would seem to make sense to lock in some profits, assuming one bought at the lows. I'm negative on Costco, but here are three other consumer names I would sell now.
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